When the EPA released its draft of the Clean Power Plan (CPP) in June 2014,[1] commentators were quick to draw comparisons[2] to Obamacare (i.e., the Patient Protection and Affordable Care Act, hereinafter the ACA).[3] One journalist even dubbed the CPP “Obamacare for the Air” because the Clean Power Plan and the healthcare reform law are both “intensely polarizing” and “numbingly complex in an effort to ensure flexibility and fairness, based on a market system . . . likely to transform a key sector of the economy for decades to come.”[4]

From a technical standpoint, both the CPP and ACA offer a variety of tools and federal assistance to help states decide how to comply.[5] Under both schemes, states can choose to run their own system, run a system in partnership with the federal government, or not run any system at all (at which point the federal government steps in to run the system for that state).[6] And, once a state decides on a compliance program, it is not stuck with it: both the CPP and the ACA allow a state to transition later on to a different level of involvement in running its own system.[7] Finally, both the CPP and the ACA drew fierce legal challenges immediately upon their promulgation and enactment, respectively.[8]

However, one area where the CPP does not resemble the ACA is how states that oppose the plan are managing their compliance efforts. Of the twenty-eight states that challenged the ACA in court,[9] twenty-two declined to establish a state-based marketplace.[10] Those states automatically defaulted to a “federally-facilitated” (i.e., entirely federally run) program[11] when the ACA marketplaces went into effect on January 1, 2014.[12] In contrast, of the twenty-seven states with CPP challenges pending before the D.C. Circuit,[13] a significant majority are actively developing compliance strategies.[14] A total of twenty of the twenty-seven states challenging the CPP have announced that they are drafting plans or requesting a two-year extension on the deadline to submit a plan,[15] though Kentucky has made it clear that its request for an extension “should not be implied as working toward a compliance plan.”[16] Though some states have made it abundantly clear that they will not develop a formal state compliance plan,[17] none of the states are remaining completely obstinate about the CPP. All of the states challenging the CPP are reportedly at least undertaking some CPP compliance activities, including stakeholder meetings and public listening sessions, if not “actively engag[ing] with the Plan.”[18]

So, what accounts for the different approach states are taking to CPP compliance, as compared with states’ reticence to comply with the ACA? States’ complaints about the CPP and the ACA are, after all, very similar. States recognize that the CPP will have a major economic impact[19] and argue that it infringes on their sovereignty;[20] they said the same things about the ACA.[21] Following are four possible explanations for states’ more proactive approach to CPP compliance:

The need for long-range planning in the utility power sector

Electric utilities must make long-range decisions—forecasting decades into the future—about infrastructure, availability of resources, siting of power plants, reliability and security of the electricity grid, rate structures, multi-year or multi-decade power purchase contracts, and so on.[22] Layered onto the years it takes to make and implement these decisions is the time required to comply with federal, state, and local regulations—which, of course, are regularly evolving. Final CPP state implementation plans are due to EPA by September 6, 2016, with the possibility of a two-year extension (which requires an initial submittal, also due on September 6, 2016, demonstrating a state’s progress toward developing a final plan).[23] EPA has stated that it will approve or disapprove of state plans within one year of their submittal.[24]

The CPP’s standards are set to go into effect in 2022,[25] so a state that misses the September 2016 deadline because it dragged its feet preparing an approvable state plan (if it decides to prepare a plan at all) may leave its utilities with only a few years to react to an approved plan before compliance is required. Given the amount of lead time utilities need before they can put many of their business decisions into action, and considering the utilities’ reluctance to be subject to a federal plan,[26] states that have already started their CPP planning give their utilities a head start towards achieving the regulatory certainty they need to engage in long-term planning. Additionally, though the states’ aforementioned commitments to draft their CPP plans predate the D.C. Circuit’s January 21, 2016 denial of the motion to stay the CPP during the court’s review,[27] the denial is all the more reason for states to continue to proactively work toward timely submittal of their plans.

Early attempts to comply with the CPP also make it more likely a state can benefit from the CPP’s optional Clean Energy Incentive Program (CEIP). The CEIP encourages states to invest in renewable energy and energy efficiency projects that deliver results during 2020 or 2021, rewarding them with emissions allowances or emissions rate credits that can be banked and used to maintain CPP compliance in the event a state has an unforeseen, emergency reliability issue.[28]

The need for regional planning and cooperation in the utility power sector

Power-plant operations are not all contained neatly within state borders: many plants distribute power across state lines, and electricity grids are similarly interconnected.[29] Naturally, such a system requires detailed coordination among states, as will adapting the system to comply with the CPP. States would rather make these important choices for themselves than allow the federal government to make some choices on their behalf, which is effectively what would happen if a state defaults to a federal CPP plan. Getting started early on their CPP planning has allowed a number of states to productively engage with their neighbors in an effort to lower the costs of compliance by setting up a regional emissions-trading program.[30] The CPP allows intrastate emissions trading and encourages interstate trading, but it is only permitted between states that have adopted the same emissions standards (i.e., mass-based states can only trade with mass-based states, and rate-based states can only trade with rate-based states).[31] States that delay in their CPP planning are missing out on the opportunity to weigh in on regional discussions about which type of emissions standards are best for that region.

The ACA also allows for regional marketplaces, but the states have yet to take advantage of that cost-cutting option.[32] Several states, however, are beginning to consider the regional-marketplace option in light of the sunset on federal funding to help states run their own state-based marketplaces.[33]

Submitting a state CPP plan involves greater opportunity for public participation

Though the public was able to comment on many ACA regulations, including the rules that govern whether a state marketplace is compliant with the law,[34] the Department of Health and Human Services did not seek public comment on a state’s “Exchange Blueprint” before the agency approved it.[35] That means a state’s choice of whether to pursue a state-based marketplace or default to a federally-facilitated marketplace had no impact how much the public could formally weigh in on HHS’s administrative decisions under the APA. The CPP, in contrast, gives the public more opportunities to be involved in the administrative review process when a state opts to submit its own implementation plan. First, the CPP requires a state to demonstrate that its plan was developed through robust public participation, including opportunity for public comment.[36] Second, EPA’s decision to disapprove of a state-submitted plan is subject to notice and comment before a federal plan would take effect.[37]

One of the grounds on which the suing states criticize the CPP is that it is an administrative overreach; that it is the kind of major economic and political decision entrusted to Congress, the body which is directly accountable to the will of the people.[38] Presumably then, these states would want the public to have as many opportunities as possible to involve itself in EPA’s CPP decisions, given that the notice-and-comment process also requires administrative agencies to be accountable to the will of the people (or to at least respond directly to their comments and explain why it did not take their suggestions). States can ensure that there are more opportunities for public comment if they submit their own CPP plans to EPA. And, of course, more solicitations of public comment by EPA means more opportunities for opponents to seek judicial review of the CPP.

Unlike with the ACA, states are experienced in dealing with the Clean Air Act

The Clean Air Act (CAA), the background legal authority for the CPP, is old hat. The CAA is stable, settled law—enacted in 1970, and without significant amendment since 1990.[39] States have years of experience developing their own implementation plans to comply with the CAA emissions standards for certain types of pollutants.[40] They have routinely opted to create State Implementation Plans to comply with the CAA’s National Ambient Air Quality Standards, which, like the CPP, employs a federal-state partnership to curtail air pollution.[41] Through this process, states and utilities have developed the “muscle memory” necessary for complying with EPA emissions rules.[42]

The ACA, in contrast, was brand new law when it was enacted in 2010. States may have been less inclined to invest their resources in developing insurance marketplaces to comply with a law many were skeptical would even be upheld.

Conclusion

Litigating the CPP will be “a marathon, not a sprint,”[43] and we are still in the nascent stages of that process. States may well end up changing their respective approaches in response to major developments in the litigation, especially if the Supreme Court responds favorably to their January 26, 2016 request for a stay of the CPP.[44] Other things equal, given that most states have already hit the ground running with a proactive approach to the CPP, such a change is not foreseeable—at least not until EPA starts issuing decisions on their individual CPP submissions several years from now.

[9] This includes (1) the twenty-six states which acted jointly in Nat’l Fed’n of Indep. Buss. V. Sebelius (NFIB), 132 S. Ct. 2566 (2012): Alabama, Alaska, Arizona, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, North Dakota, Ohio, Pennsylvania, South Carolina, South Dakota, Texas, Utah, Washington, Wisconsin, and Wyoming; (2) Missouri, which filed its own suit that was later joined on appeal (Kinder v. Geithner, 695 F.3d 772 (8th Cir. 2012)) by twenty-one of the twenty-six states from NFIB; and (3) Virginia, which sued on its own in Cuccinelli, 728 F. Supp. 2d 768. For the sake of simplicity—and ease of comparison to the states involved in West Virginia v. EPA—this does not include the states which were not part of the three aforementioned ACA suits but challenged portions of the law in later suits.

[12] On January 1, 2014, twenty-eight states were federally facilitated, fifteen states and the District of Columbia were state based (including Idaho’s state-based marketplace, which used the federal healthcare.gov site instead of a state website (this is called a “federally-supported state-based marketplace,” id.) and seven states ran their marketplaces in partnership with the federal government. See Nat’l Conf. of St. Legislatures, supra note 10. In 2016, twenty-seven states are federally facilitated, sixteen states and the District of Columbia are state based (including four which are federally-supported state-based marketplaces), and seven states operate marketplaces in partnership with the federal government. See Kaiser Fam. Found., supra note 11. Kentucky currently has a state-based marketplace, but its governor plans to dismantle it and transition to a federally-facilitated marketplace in 2017. See id. at n.3.

[30] Emily Holden, Despite Political Rhetoric, 41 States Exploring Clean Power Plan Options, ClimateWire (May 18, 2015), http://www.eenews.net/stories/1060018680 (“Reports from grid organizations and think tanks routinely stress that regional collaboration limits costs. If one state has a tough goal and a neighboring state has an easier goal and the ability to build cheaper zero-carbon energy, both states can benefit . . . .”).